Rupee Weakens Against Greenback As Dollar Index Near 3-Week High

The rupee opened weaker against the greenback as the dollar index is trading near three-week high. The rupee lost 20 paise to open at 85.91 against US Dollar, according to data on Bloomberg.

The Indian unit settled five paise higher at 85.71 against the greenback on Wednesday, according to Bloomberg data. The Indian unit pared most gains from day's high as the dollar index and crude oil prices advanced in later half of the trade session.

On Wednesday, the dollar index, which measures the strength of the greenback against six major currencies, rose 0.48% to 104.68, the highest level since March 5. Despite losing some grounds, the index was trading close to three-week high in Asia session, which pressured emerging-market currencies.

Investors flock to the safe-haven currency as tension increased regarding international trade after US President Donald Trump said that the country will impose additional 25% tariff on all automobile imports from April 2. The announcement regarding automobiles came right after copper tariffs.

"Recent announcements on Copper tariffs and stalling Russia-Ukraine negotiations are triggering some flight into USD. For USDINR, 85.60 acts as a resistance while 86.15 a support," said Kunal Sodhani, vice president, Global Trading Centre, Shinhan Bank.

The dollar index was 0.19% down at 104.35 as of 8:52 a.m., according to data on Bloomberg.

Crude oil prices hit one-month high after data showed that inventories fell the most since December, which raised worries about near-term supply. The May future contract of brent crude rose as much as 1.57% to $74.17 a barrel in Wednesday's session, touching the highest level since Feb 27.

Oil future prices extended gains to sixth consecutive session on Thursday. They were trading 0.15% higher at $73.90 a barrel as of 8:52 a.m.